With the global economy set for moderate growth of 3.3 percent according to the IMF and as quoted in the FT, split between 5.3 percent expansion in the emerging world and 1.3 percent growth in the developed world, all eyes are turned to China as the most influential source of growth this year and next.
The FT argues that the world’s largest economy, that of the US, holds the key — but while growth in the US has been moderate, conflicting data suggests a drop in jobless levels and a rise in the construction market are proving elusive as drivers of any kind of sustained recovery.
Both are probably needed for real confidence to return, and meanwhile, the US faces a post-election period of brinkmanship leading up to the New Year when the economy risks falling over this oft-hyped phrase, the “fiscal cliff,” if a budget deficit reduction program cannot be agreed upon.
In the meantime, hopes have been voiced that China may have bottomed and the recent data used to support the notion among some metals investors that the economy is responding to fiscal easing and stimulus measures. But a Reuters article calls this into doubt, particularly from the viewpoint of metals and commodity demand.
A super little interactive graph produced by Reuters and accessible via this link allows the viewer to see changes in import/export volumes for a wide range of commodities in addition to economic measures like GDP.
Upticks in crude oil, iron ore and copper imports suggest metals consumption is making a bounce back, but Reuters interprets the data differently.
Taking crude oil first, the 20.08 million tons imported in September seem like a significant increase from August’s 18.4 million tons. But August was exceptionally weak, and excluding that month makes the September figure the weakest since July last year, meaning it is hardly evidence of a strong rebound in fuel demand in China and suggests the last two months of crude imports have been the weakest in more than a year.
What about iron ore imports?
To be continued in Part Two.